Apply for more time for MTD digital links

For VAT periods starting on or after 1 April 2020 (or 1 October 2020 for deferred businesses) your accounting systems must use digital links for any transfer or exchange of data between software programs, products or applications used as functional compatible software. That is the end of the current 12 month “soft landing” extension.

Businesses with complex or legacy IT systems may require a longer period to put digital links in place. These businesses can apply to HMRC for additional time to put the required digital links in place. If your business qualifies then the additional time will be granted as a specific direction from HMRC.

If, for example, your company purchases another business it may take additional time to digitally link different software applications or packages to meet the MTD legal obligations. HMRC will consider an application to extend the digital link deadline longer than the “soft landing” period.  That would mean the businesses would continue to be able to “cut and paste” during the extension period.

Collecting unpaid tax for 2018/19 through your PAYE coding

Under certain circumstances it is possible to arrange the collection of unpaid tax through your PAYE coding rather than making a balancing payment on 31 January.  This will depend upon the amount outstanding and the amount of income taxable under PAYE. There is a further condition that the return is submitted to HMRC online before 30 December 2019 in order that the 2018/19 tax may be collected by amending the 2020/21 PAYE coding.

So please get your tax return information to us as soon as possible if you would like to take advantage of this facility.

 

When will Budget Day be now?

The current political uncertainty makes it difficult to give clear tax advice as a number of key proposals in the draft Finance Bill scheduled to take effect from April 2020 might not now take place, due to the December general election.

The key tax measures “in limbo” until legislated in Finance Act 2020 are:

– Extending the “off-payroll” working rules to the private sector

– Restricting R&D repayable credit for SMEs

– Limiting CGT private residence and lettings reliefs

– The proposed 2% reduction in P11d car benefits

The “off-payroll” working rules will almost certainly proceed, even if not from 6 April 2020, and thus businesses and workers affected should prepare for the planned changes.  Contact us if you need help in assessing the likely impact on your business.

Apply early for the Grant Scheme to help with Brexit

HMRC has announced that it will provide a further £10 million in grants to provide funding towards training and IT costs for businesses that complete customs declarations for customs agents and intermediaries to build capacity in managing customs declarations.

This additional wave of grants has been developed to directly respond to industry feedback on what is needed to help build capacity ahead of, or after, Brexit, alongside the additional training and IT support already available.

Applications are open to businesses based in, or with a branch in, the UK, that currently complete customs declarations for importers and exporters.

They are available to support costs of hiring staff, including £3,000 for recruitment costs, and up to £10,000 for salary costs, to help build business capacity.

You can read full details of what can be claimed and how to apply on GOV.UK

Businesses that will benefit from the funding are encouraged to apply early, as applications will close once all the funding has been allocated, and by 31 January 2020 at the latest. Those that applied for the first and second wave of grants may apply again as part of this new wave.

Businesses that want to apply for funding should not contact HMRC, but can apply online.

 

Don’t forget there may be tax to pay on your dividends in January

The rules for taxing dividends changed radically from 6 April 2016 with the removal of the 10% notional tax credit and the introduction of new rates of tax on dividends. For many taxpayers that means more tax to pay on dividends on 31 January each year.

If you are a higher rate taxpayer and received £22,000 of dividends in 2018/19 only £2,000 of those dividends are tax free now leaving £20,000 of those dividends to be taxed at 32.5% meaning £6,500 due on 31 January 2020, and possibly payments on account of your 2020/21 liability.

If you can let us have all of your tax documents as soon as possible we can let you know how much tax you need to pay next January so that you can set aside sufficient funds. We may also be able to suggest some tax planning ideas to reduce your tax liabilities.

Time for an electric company car? or should you wait until April 2020?

The government has announced that there will be a zero P11d benefit for the drivers of electric cars from 2020/21. This is instead of the 2% scale charge that was originally included in Finance Act 2017 to apply for 2020/21. The legislation for the change will be included in Finance Bill 2020 and it is proposed that the benefit will be 1% of list price in 2021/2 and then 2% in 2022/3.

The zero taxable benefit will also apply to hybrid cars emitting no more than 50 grams of CO2 per kilometre with a range using its electric motor of at least 130 miles, but only for cars first registered on or after 6 April 2020. For those registered before 6 April 2020 the scale charge will be 2%.

Rather confusingly there will be two different sets of scale charges from 2020/21, one set relating to those registered before 6 April 2020 and a new lower set of rates for those registered on or after 6 April 2020.

However businesses are advised to wait until 6 April 2020 as the P11d scale charge for electric cars is currently 16% of original list price for 2019/20.

Radio presenter wins IR35 personal service company case

The extension of the “off-payroll” working rules to the private sector mentioned in our previous blog is planned for April 2020 but in the meantime tax tribunal decisions are still being decided against HMRC.

In a recent case involving a radio presenter working for TalkSport, it was decided that the presenter would not have been an employee if directly engaged. A key factor was that the the level of control over the presenter fell far below the sufficient degree required to demonstrate a contract of service.

The accountancy bodies have been lobbying the government to take the decision of the judges in this and the recent case involving Lorraine Kelly into consideration when they update the CEST software used to determine employment status.

The Chancellor is planning to hold a Budget on 6 November 2019

The Chancellor of the Exchequer, Sajid Javid, has announced he is planning to hold a Budget on Wednesday 6 November 2019.  The format  on 6 November is understood to depend on whether a Brexit deal is agreed.

In the event of a no-deal Brexit, it is thought that there will be a simple economic statement on 6 November. The announcement of the Budget date by HM Treasury indicates that an economic statement would be followed by a Budget in the weeks thereafter.

 

Preparing for Brexit – Customs intermediaries grant scheme

Leaving the EU on 31 Oc‌to‌be‌r 2019 means there will be immediate changes to the way UK businesses trade with the EU that may impact your business.

This includes UK businesses having to apply customs, excise and VAT procedures to trade with the EU, in the same way that already applies for goods and services traded outside the EU.

Customs intermediaries grant scheme

HMRC have announced £16 million in new government funding is now available to help businesses prepare.

Businesses based in, or with a branch in the UK can apply for funding ahead of the UK leaving the EU. Grants can be used to support:

  • training costs for businesses who complete customs declarations, or who intend to in the future
  • IT improvements to help your business complete customs declarations more efficiently.

To ensure maximum impact, the second wave of the grant scheme allows businesses to apply for the full cost of training, within certain limits as set out in the HMRC guidance.

Further information about EORI numbers

HMRC have published an Economic Operator Registration and Identification (EORI) number mythbuster, which hopefully dispels common misconceptions about EORI numbers.

Get ready for the “off-payroll” working rules

Where large or medium-sized organisations are paying workers via personal service companies or agencies they will need to operate new procedures from 6 April 2020.

The new rules will apply to partnerships, LLPs and larger charities as well as limited companies. Only those organisations that would be classed as “small” under the Companies Act criteria will be outside of the new rules.

From 6 April 2020 the end user organisation will be required to determine whether or not the worker would be an employee of the organisation if directly engaged. That determination will need to be communicated to the agency supplying the worker so that income tax and national insurance is deducted from any payments.

The end user organisation should use the Check Employment Status for Tax (CEST) software on the HMRC website to carry out the determination. A copy of the determination should also be given directly to the worker.

What if the worker disagrees?

Where the worker disagrees with the employment status determination they should contact the end user straight away setting out their grounds for disagreement.

The end user must provide a response within 45 days of receiving the disagreement. During this time they should continue to apply the rules in line with the original determination.